Chile bucked the trend in Latin America last year with an increase in foreign direct investment, attracting almost as much as Mexico, a country with seven times the population, according to the United Nations Latin American and Caribbean unit.
While Mexico received $22.8 billion, Chile lured $22 billion, said the organization, known as Cepal for its initials in Spanish. The only country to receive more in Latin America and the Caribbean was Brazil with $62.5 billion.
FDI into Latin America and the Caribbean fell 16 percent last year from 2013, with investment into Mexico tumbling 49 percent, while Brazil declined 2 percent. Investment into Chile, the region’s wealthiest nation, rose 14 percent over the same period, the only major country in Latin America to see an increase. More should now be done to diversify investment, Cepal said.
Policies “shouldn’t be designed to recover the amount of direct foreign investment reached in the past decade, but in attracting FDI that contributes to productive diversification,” said Alicia Barcena, Cepal’s executive secretary.
Investment in Mexico should pick up over the next few years as President Enrique Pena Nieto implements constitutional changes adopted in 2013 to end a seven-decade state monopoly on oil and gas, said Alexis Milo, chief Mexico economist at Deutsche Bank AG.
“A country like Mexico should be receiving a larger amount,” Milo said by phone from Mexico City. “It’s underperforming.”
The money flowing into Chile rose even as the economy grew at its slowest pace since the 2009 recession, with business leaders blaming government policies for deterring investment. Those policies included higher corporate taxes and plans to expand the powers of labor unions.
Attracted by Chile’s expanding middle and upper class, Lamborghini opened its first showroom in 2014, Christie’s opened its first fine art auction room and Wendy’s started selling Baconator burgers in the capital, Santiago.